Dear Fellow Taxpayer

Despite all of the recent changes to the tax law, one of the most important tax breaks for 2010 isn’t being claimed by a surprising number of people:

You can contribute up to $16,500 to your company’s tax-deferred 401(k) retirement plan this year ($22,000 in some cases).  So can your spouse.

For a couple in the 25% tax bracket, that’s an immediate savings of $8,250 that they can keep in their bank account rather than writing a check to the IRS.

Be aware that several tax breaks come with strings attached:

  • Small businesses can get a credit for giving employees health insurance … but not all small firms qualify.
  • Congress slashed the top tax rate on capital gains and dividends to 15% … but not for all gains and dividends.
  • Businesses can deduct 9% of income derived from domestic manufacturing and production … but not from certain activities.

Let’s face it.  Whether you’re a taxpayer or a tax professional, there are so many recent and pending tax law changes that it’s amazingly difficult, and incredibly time-consuming, to keep up.

Kiplinger has just released the new 2010 edition of Kiplinger’s Federal Tax Reduction Kit. Find it online at www.kiplinger.com/go/taxletter

“The first step toward change is acceptance. Change is not something you do, it’s something you allow.”  – Will Garcia